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Headphones Makers Battle For Piece Of $1B Turf

In an economic environment where nearly
every CE category has gone through its own perilous
time, headphones have risen above the fray with healthy
sales and growth.

The category sees so many new product introductions
— from both new companies and already-established audio
players — that it could fill its own section of TWICE. As
a result, the market is getting crowded, said Ben Arnold,
industry analyst at The NPD Group, and consumers are
having a difficult time discerning the little guys from the
big ones.

Sales of headphones hit $1.2 billion in 2011, up a whopping
42 percent from 2010’s $868.1 million, according
to NPD, and the top five brands
in headphones in terms of dollar
sales were Monster, Sony, Bose,
Skullcandy and Philips. In units,
Sony took top billing, trailed in
order by Skullcandy, Philips, JVC
and Monster.

So where does that leave the
other manufacturers who aren’t
on this list, particularly the smaller
and the newer manufacturers?
Some, such as Coby (which is
neither small nor new, but isn’t in the top five), aim to appeal
to the same type of consumer as Skullcandy — the
“aspirational consumer,” Christi Park, Coby product manager,
told TWICE recently.

Others, like V-Moda, paint themselves with a different
brush altogether in the category. When asked how he
wants V-Moda to be viewed, founder and CEO Val Kolton
said he wants his company to be known for making art and
hopes his headphones will one day be in a museum.

But while both V-Moda and Coby are already established
players in the CE marketplace, the newer entrants,
such as AfterShokz and Audiofly, may be swimming
against the tide. One major dart against them is the difficulty
of marketing their products without being able to get
retailers to listen to them, NPD’s Arnold said.

“I think these lesser-known guys have to do something
to break through the ‘noise’ in the space. There are so
many new and established brands on the market now with
a variety form factors and price points that there are competitors
at every turn,” he said.

“It’s not just marketing though. The key really is getting
consumers to appreciate the sound quality — or comfort
if the headphone/ear buds form factor are a selling point
— while the product is still in the box. These younger companies
need to find inventive ways to sell their products
with limited existing brand awareness.”

Celebrity headphones are a popular selling technique,
to be sure, with new models launched at International
CES last month from Ludacris, 50 Cent and Nick Cannon,
to name a few. Arnold said he expects this trend to
continue, although “at some point, this model does get
tired, so maybe there are other
partnerships or associations that
can be forged.” He cited cobranded
headphones with Spotify
or Pandora as examples, as well
as video-themed models.

Dave Thompson, founder of Audiofly,
agreed that the headphones
market is extremely crowded and
called it “a consumer’s paradise.”

“Our research has shown that
in a growing market, there are
those brands that represent a legacy of audio engineering
with their products, and there are those brands that are
focused on the pop culture/fashion influences of a current
generation. Each approach is valid, and has found a
consumer audience,” Thompson said.

“Our focus with Audiofly is to create products from a
musician’s perspective,” he added, noting that the company
relies heavily on professional IEMs that they used
during performances.”

Other manufacturers are trying to reinvent the typical
headphones form factor to distinguish themselves from
the pack. SOL Republic, started by Monster protégé Kevin
Lee, is pushing their modular headphones, with speakers
and headbands that can be swapped, while Aftershokz
has created headphones that are designed to be worn outside
of the ear canal. Both companies told TWICE they believe
their innovative designs will set their products apart.